Complete guide to permits and licenses required to start a towing in Salem, OR. Fees, renewal cycles, and agency contacts.
SMC 300.05
Required for all employers in Oregon with one or more employees, including part-time and family members. Sole proprietors without employees are exempt but must file a waiver if they wish to exclude themselves. Towing business owners who operate alone may opt out but must file Form 842-150A.
Oregon law requires all motor vehicles registered in the state to have liability insurance meeting minimum limits: $25,000 bodily injury per person, $50,000 per accident, $20,000 property damage. This applies to all towing vehicles used in business operations.
Not legally required by Oregon state law for towing businesses, but strongly recommended due to risk of property damage or customer injury. May be required by third parties (e.g., towing contracts, property owners, or municipalities). Not enforced by a state agency.
A $10,000 surety bond is required for all tow truck operators providing services for compensation. This is part of the Tow Truck Operator License application process. The bond ensures compliance with Oregon Revised Statutes (ORS) 822.200–822.370 and related rules.
Not legally required in Oregon for towing businesses. However, it may be prudent to cover claims related to negligence, misrouting, or damage during transport. No state agency enforces this requirement.
Not required unless the business sells physical products (e.g., towing accessories). Most towing businesses do not sell products, so this is generally not applicable. Oregon does not mandate product liability insurance separately.
Not required for towing businesses unless the business operates a bar or serves alcohol, which is not typical. OLCC requires liquor liability only for licensees selling alcoholic beverages.
Not required by Oregon state law, but strongly recommended and often required by clients or municipalities. Covers damage to customer vehicles in the business’s care, custody, or control. Often bundled with general liability or commercial auto policies.
Even single-member LLCs without employees may need an EIN to open a business bank account or if they elect to be taxed as a corporation. For towing businesses, EIN is typically necessary due to vehicle operations and potential employee hiring.
By default, single-member LLCs are disregarded entities and report income on the owner's personal tax return (Schedule C). Multi-member LLCs are taxed as partnerships and must file Form 1065. Towing businesses must report all service revenue. Self-employment tax applies to net earnings over $400.
Towing businesses must comply with general industry standards (29 CFR 1910), including hazard communication, personal protective equipment (PPE), and recordkeeping (OSHA Form 300). Employers with 10 or more employees must maintain injury and illness records. Emergency action plans may be required if hazardous conditions exist.
Towing businesses that operate a physical office, dispatch center, or customer service area must ensure accessibility under Title III of the ADA. This includes accessible phone lines, websites (if used for service requests), and physical access. Online booking systems must be accessible to individuals with disabilities.
Required for all LLCs. Annual report required separately (see below).
Applies to all LLCs.
Required if using a trade name/DBA.
Required for all non-exempt towing operations (most towing services qualify). Includes USDOT number if interstate.
Each tow truck must have a Certificate of Compliance decal. Requires vehicle inspection.
Specific "Tower License" issued to towing businesses upon MCTD approval.
Class A/B CDL often required for heavy-duty tow trucks. Towing endorsement may apply.
Oregon has no statewide general business license; check specific city/county (e.g., Portland, Salem). Not state-level.
Towing businesses that maintain tow trucks with large fuel tanks, hydraulic systems, or on-site fuel storage may be subject to SPCC requirements. Requires a certified engineer-prepared SPCC Plan, secondary containment, and employee training.
Towing businesses must avoid deceptive advertising (e.g., false pricing, misleading claims about response time or licensing). Must disclose fees clearly, especially for emergency tows. FTC enforces against bait-and-switch tactics and failure to honor advertised rates. Applies to online ads, signage, and verbal quotes.
All employers, including towing LLCs with employees, must verify identity and work authorization using Form I-9. Employers must retain forms for 3 years after hire or 1 year after employment ends, whichever is later. ICE may conduct audits.
Towing businesses must pay at least federal minimum wage ($7.25/hour) and overtime (1.5x regular rate for hours over 40/week). Independent contractor classification must be accurate; misclassification of tow truck operators is a common audit issue. Recordkeeping of hours and wages is mandatory.
Towing businesses meeting the 50-employee threshold must provide eligible employees up to 12 weeks of unpaid, job-protected leave for qualifying medical or family reasons. Notice requirements and recordkeeping apply.
Federal law requires CDL for drivers operating large tow trucks. Oregon follows FMCSA standards. Employers must verify CDL status through the Commercial Driver’s License Information System (CDLIS) and maintain driver qualification files.
Towing businesses engaged in interstate commerce must register with FMCSA, obtain a USDOT number, and complete the New Entrant Safety Assurance Process, including a safety audit within 18 months. Applies even if only occasional interstate tows occur.
Tow truck drivers engaged in interstate commerce must comply with HOS limits (e.g., 14-hour driving window, 11-hour driving limit). ELDs are required to automatically record driving time unless exempt (e.g., under 100 air-mile radius exception). Oregon follows federal ELD mandate.
Towing businesses accepting large cash payments (e.g., from insurance companies or individuals) must file Form 8300 with FinCEN. Applies to single payments over $10,000 or multiple payments totaling more than $10,000 in a 24-hour period.
Towing services in Oregon are generally not subject to sales tax unless a vehicle is sold or parts are sold and installed. However, if the business sells towing-related equipment or accessories at retail, a sales tax permit is required. See ORS 305.005 and ORS 305.015.
Required for all employers with employees in Oregon. Employers must withhold state income tax from employee wages. Registration is completed via the same form (OREGON Business Registry) as other tax accounts.
All employers in Oregon must pay unemployment insurance tax. Rate and wage base are updated annually. Employers register via Oregon Employer Account (OREGON Business Registry).
The CAT applies to most businesses operating in Oregon with revenue over $1 million. LLCs are subject to CAT unless electing corporate status. Towing businesses structured as LLCs are generally subject to CAT if revenue threshold is met. Replaced corporate excise tax for most entities. See ORS 317.615.
Required for LLCs with employees or multiple members. Single-member LLCs without employees may use owner’s SSN, but EIN is recommended for liability protection. Applied for online via IRS.
All businesses operating in Oregon must register with the Oregon Business Registry, which coordinates tax accounts with DOR and Employment Department. Includes sales tax, withholding, and CAT registration if applicable. Done via online portal: https://sos.oregon.gov/business/Pages/registry.aspx
Many Oregon cities (e.g., Portland, Eugene, Salem, Beaverton) require a local business license or privilege tax. Fees and requirements vary. Towing businesses operating from a physical location or conducting regular operations in a city must comply. Check with individual city clerk’s office. Portland example: https://www.portland.gov/auditor/business-licenses
Required for all businesses operating in Portland city limits; towing qualifies as non-exclusive business
Portland businesses exempt; applies county-wide outside cities
Cite Portland Zoning Code Title 33; vehicle storage lots require Type 2 Land Use Review
Chapter 32.48 Portland Sign Code; freestanding signs common for towing businesses
IFC Chapter 1 Section 105.6; applies to auto wrecking/storage yards
Portland City Code 14B.50
Common for police-directed tows; PCC 3.96
Required before zoning approval
Title 17 Clackamas County Code; vehicle storage requires public hearing
Eugene Code 2.015
ADA compliance costs can vary significantly, ranging from $0.00 to $5000.00 depending on the physical accessibility of your business and any necessary modifications to accommodate individuals with disabilities. The Department of Justice determines these costs based on the scope of required changes.
If you operate in Portland, you will need to obtain a Portland Business License Tax Registration Certificate from the City of Portland Revenue Division, which currently costs $50.00 for initial registration and requires annual renewal.
The Federal Trade Commission requires towing companies to adhere to Truth-in-Advertising and Consumer Protection Rules, ensuring fair pricing and honest advertising. Compliance with these rules may involve varying fees depending on the specific requirements and any legal counsel needed.
The IRS requires you to keep records documenting your income, expenses, and other financial transactions for at least three years, and potentially longer. This includes invoices, receipts, bank statements, and tax returns, and can involve varying fees for record storage and management.
Yes, as an LLC, you have Federal Income and Self-Employment Tax Obligations that require filing with the IRS. The fees associated with these obligations vary based on your income and deductions, and may include estimated tax payments throughout the year.
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